Limitation For Appointment Of Arbitrator Commences From Date Of Failure To Comply With Requirements In Notice Invoking Arbitration: AP High Court

The Andhra Pradesh High Court bench of Chief Justice Dhiraj Singh Thakur has held that the limitation period for filing an application seeking appointment of arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996, commences only after a notice invoking arbitration has been issued by one of the parties and there has been either a failure or refusal on the part of the opposite party to make an appointment as per the procedure agreed upon between the parties. It was further submitted that the procedure mentioned in the arbitration clause which authorized the Managing Director of the Respondent to appoint the sole arbitrator was contrary to the ratio of judgments of the Apex Court in the case of Perkins Eastman Architects DPC v HSCC Ltd. and Central Organization for Railway Electrification v. ECI SPIC SMO MCML. The Court referred to the judgment of the Apex Court in Arif Azim Co. Ltd. v. Aptech Ltd. wherein the court had observed that the “limitation period for making an application seeking appointment of arbitrator must not be conflated with the limitation period for raising the substantive claims which are sought to be referred to an arbitral tribunal.” The Court also relied upon the judgment of the Apex Court in Aslam Ismail Khan Deshmukh v. ASAP Fluids Ltd. wherein the court had observed that the period of limitation of three years, for the purposes of a Section 11 application would begin from the date of failure or refusal by the other party to comply with the requirements mentioned in notice invoking arbitration. Applying the law laid down in these precedents to the facts of the present case, the Court observed that the notice invoking arbitration clause was issued by the Applicant only on 17.10.2022.